Sunak delivers bailout package
British Finance Minister Rishi Sunak said the coronavirus outbreak would require government support on a previously unimaginable scale, starting with 330 billion pounds ($398 billion) of loan guarantees for businesses.
“This struggle will not be overcome by a single package of measures or isolated interventions,” he said at a news conference. “This national effort will be underpinned by government interventions in the economy on a scale unimaginable only a few weeks ago.”
Sterling dropped to its lowest level against the dollar since early September on Tuesday, as investors hoovered up the US currency and after Britain toughened its approach to containing the coronavirus outbreak.
The pound has been in retreat as fears about the likely full economic impact of the pandemic have roiled global markets and sent investors fleeing to assets seen as relative safe havens, including the dollar.
The British currency last traded at such levels back in September, at the height of fears the country was headed for a sudden, disorderly exit from the European Union.
The US dollar surged on Tuesday as companies and investors sought out the most liquid currency as concerns about economic shutdowns from the coronavirus continued to dent risk appetite.
The Federal Reserve on Sunday slashed rates to zero and launched a new bond purchase program. Other central banks have taken similar measures but the moves have so far failed to stem liquidity strains and market panic.
Central banks have also cut pricing on their swap lines to make it easier to provide dollars to financial institutions around the world.
The US currency had initially fallen in early March as government bond yields tumbled, but the dollar has since rebounded, and measured against a basket of major currencies is now up around 5% since March 9th.
President Donald Trump’s administration and leading Republicans urged the Senate on Monday to swiftly back a House-passed coronavirus aid plan and seriously consider massive new economic stimulus legislation that was still under development.
Data on Tuesday showed that US retail sales unexpectedly fell in February, with households cutting back on purchases of a range of products, and the coronavirus outbreak is expected to depress sales in the months ahead.
11.30 – Annual Budget Release.
12.30 – CPI MoM; Forecast at 0.0% against previous of 0.1%.
12.30 – Core CPI; Forecast same as previous at 0.2%.
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